Ohio Security Insurance Company v. Ridgecrest Restoration Ministries
1:23-cv-00191-ADA-CDB
| E.D. Cal. | Sep 5, 2023Background
- Ohio Security Insurance Company issued a CGL policy to Ridgecrest Restoration Ministries effective Nov 30, 2021–Nov 30, 2022; the policy contains an auto/vehicle exclusion and defines "insureds" to include employees/volunteer workers.
- In state court, Agazaryan and Hekimian sued Ridgecrest alleging Agazaryan was injured on Oct 24, 2022 by a vehicle owned by Ridgecrest and driven by Richard Romeo Daigle.
- Ridgecrest and Daigle tendered defense to Ohio Security; the insurer agreed to defend under a reservation of rights and later filed this declaratory-judgment action seeking a ruling that it owes no duty to defend or indemnify.
- Ohio Security alleges Daigle qualified as an "insured" (employee/volunteer) so the policy’s auto exclusion bars coverage for the underlying auto-related injury claims.
- Daigle was personally served but failed to appear; the clerk entered his default and Ohio Security moved for default judgment (seeking only declaratory relief, having abandoned monetary reimbursement claims).
- The magistrate judge applied the Eitel factors and recommended granting default judgment declaring Ohio Security has no duty to defend or indemnify Daigle; the action to be closed unless objections filed within 14 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend under the Ohio Security Policy | Policy’s insured definition covers Daigle, but the auto exclusion bars coverage for injury arising from use of an auto he operated | No responsive defense (default) | Court: allegations taken as true; auto exclusion applies; no duty to defend |
| Duty to indemnify for underlying claims | Same exclusion that negates duty to defend also negates duty to indemnify for auto-related claims | No responsive defense (default) | Court: no duty to indemnify |
| Subject-matter jurisdiction (diversity) | Parties are completely diverse and amount in controversy exceeds $75,000 | Not contested | Court: diversity jurisdiction and Declaratory Judgment Act invoke federal jurisdiction |
| Appropriateness of default judgment | Entry of default and application of Eitel factors justify default judgment for declaratory relief | Default/no appearance | Court: all Eitel factors favor default judgment; recommended grant |
Key Cases Cited
- NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606 (9th Cir. 2016) (default judgments ordinarily disfavored)
- Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (seven-factor test for default-judgment analysis)
- Geddes v. United Fin. Grp., 559 F.2d 557 (9th Cir. 1977) (well-pleaded allegations deemed admitted on default)
- Davis v. Fendler, 650 F.2d 1154 (9th Cir. 1981) (default judgment without hearing allowed for liquidated/ascertainable damages)
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996) (complete diversity requirement explained)
- Lincoln Property Co. v. Roche, 546 U.S. 81 (2005) (corporate citizenship for diversity jurisdiction)
- St. Paul Mercury Indem. Co. v. Ralee Eng’g Co., 804 F.2d 520 (9th Cir. 1986) (choice-of-law principles for declaratory relief in diversity suits)
- Nishimatsu Constr. Co. v. Houston Nat’l Bank, 515 F.2d 1200 (5th Cir. 1975) (defendant not held to admit legal conclusions on default)